Tuesday, October 19, 2010

Bloomberg:N.Y. Fed Backing Boosts Pimco Push For Mortgage Buybacks -- The Federal Reserve Bank of New York joined with the biggest bond investors in the U.S. in seeking to force Bank of America Corp. to buy back bad home loans packaged into securities, as the battle over who will bear mortgage losses intensifies.

The regulator joined a group including Pacific Investment Management Co. and BlackRock Inc. in a letter to the lender and to Bank of New York Mellon Corp., the trustee for $47 billion of mortgage-backed bonds sold by Bank of America’s Countrywide Financial Corp. unit, people familiar with the matter said. Countrywide failed to service loans properly, law firm Gibbs & Bruns LLP said in a statement that didn’t name the firms...

Bellistri, who bought the house as an investment after it was seized for non-payment of taxes, failed to notify Mortgage Electronic Registration Systems Inc. of his purchase, the judge said. A state appeals court last year had ruled otherwise, finding Bellistri didn’t need to tell MERS, a company that lets banks electronically register their sales of home loans so they can avoid trudging down to the county land-records office.

The case highlights a debate raging in courts on the role MERS has, if any, in home foreclosures. How it’s resolved will determine whether MERS’s involvement produced a defective process and clouded millions of property titles. A definitive ruling against MERS might slow any future bundling of mortgages into securities since the company played a role in that process.

“MERS is the central device by which the banks have tried to opt out of the legal system and the real-property record system,” U.S. Representative Alan Grayson of Florida said in an interview...

MarketSurfer:All Your Homes Are Belong To Us -- Reading the attached insider memo from Wells Fargo sent a chill up my spine. It appears they are preparing an aggressive and vicious counter attack against underwater home owners who are challenging the legality and validity of their mortgage contract...

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David Dayen / Firedoglake: MERS-y, Mercy Me: The Sewer Drain at the Bottom of the Housing Market — If you still think, like Shaun Donovan, that the crisis in the mortgage markets merely concerns foreclosure paperwork, you need to take a look at thesetwo Law Review papers from Professor Christopher Lewis Peterson of the University of Utah (via). They provide, in excruciating detail, the story of MERS, short for Mortgage Electronic Registration System: the private corporation built by the mortgage lending industry, whose tool for electronically trading mortgages has thrown the entire housing market into turmoil. In the name of saving a buck, the mega-banks used this tiny company with almost no employees and entrusted it with 60 million of the nation’s mortgages on its system – 60% of all mortgages in the United States – to predictable results.

Starting in the early 1990s, the mortgage lending industry, seeking speed and the evasion of land title costs, decided to bypass the state and county registrars which would normally track and assign the title ownership of properties. Instead they created and used MERS, which operates a database to track that ownership. And they list MERS as the “mortgagee of record” with the county recorder – so that all the sales and resales and securitization of the mortgages will not result in the fees that follow the recording of mortgage assignments. Peterson explains that this saves the servicers a measly $22 a loan, which of course adds up when you consider the number of loans and trades per year...

CNBC: We Could Be Headed For A Put-Back Tsunami -- That real issue has been lost in all this discussion of "robo signing" and affidavits. While there will probably be mistakes made on individual loans as to whether they were legitimately the basis of the foreclosure, the facts are after my team and I have been reviewing hundreds and hundreds of these loans, the vast majority of borrowers who are being foreclosed on are in default and those foreclosures need to go forward...

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Christopher Whalen / Reuters:In a new period of instability, Obama becomes Hoover -- It also is time for Chairman Bernanke and other Fed governors to publicly own up to the surreptitious transfer of hundreds of billions of dollars per year from American savers to the largest banks, a cowardly strategy that is allowing the Obama Administration and Congress to avoid making tough decisions about restructuring the U.S. financial system. The spectacle of Treasury Secretary Tim Geithner publicly accounting for repayment of TARP while the largest U.S. banks sink into insolvency is a national scandal...

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Reuters:Japan says economy at standstill -- Japan's government said on Tuesday that the economy was now at a standstill, highlighting the growing gulf between developed and emerging countries at the heart of global currency tensions.

In a monthly report, the government downgraded its assessment of the economy for the first time since February 2009. A senior Japanese official said further pressure on the economy, which is mired in stubborn deflation, could tip it into recession...